Key takeaways
- Segregation has three levels: a separate record in the custodian's books, a pooled (omnibus) wallet, and a wallet that holds one client's assets only.
- Dubai's Custody Services Rulebook, as read for our due-diligence guide, requires separate wallets for each client and bans rehypothecation, even with the client's consent.
- Segregation is not a guarantee. MAS requires a risk warning saying a trust or segregated account may not fully protect a customer if the provider's business fails.
- Ask for documents, not adjectives: custody terms or trust deed, sample addresses, the re-use clause and a legal opinion.
What segregation of client assets means
Segregation is the separation of client assets from the custodian's own assets, and from each other. A custodian that is also a trading firm, lender or exchange could otherwise mix client holdings with its own. Keeping them apart makes it possible to say, at any time, which assets belong to which client.
It is one part of a wider protection, covered in bankruptcy-remoteness for custodied assets, which also depends on legal title, a ban on re-use and the governing law. For the role of the custodian itself, see what a digital asset custodian is.
Dubai's Custody Services Rulebook states that assets in custody “are not depository liabilities or assets of the VASP”, the licensed firm. That wording matters because it treats client assets as separate from the firm's own balance sheet.
Three levels of segregation
Not every arrangement called “segregated” is the same. In practice there are three levels, in rising order of visibility.
| Level | How assets are held | What you can verify |
|---|---|---|
| Book-entry only | Assets sit in the custodian's wallets; client claims are recorded in its ledger. | Only the custodian's records and any audit of them. |
| Omnibus wallet | One address pools the assets of many clients and separates them in the books. | The pooled balance on-chain; your share only through the records. |
| Segregated wallet | A wallet or address set holds one client's assets only. | Your balance on-chain, at addresses you can check. |
Segregated wallets give the most visible form of segregation, but they do not by themselves settle who has legal title. Key security is a separate question, compared in MPC, HSM and multisig custody. The comparison with holding keys yourself is in custody vs self-custody for institutions.
What segregation does not do
Segregation reduces risk but does not remove it. Three limits are worth stating plainly.
- It is not title. A separate wallet does not say who owns what in law. The custody terms or trust deed does.
- It does not stop re-use unless the contract does. Rules differ by market. Dubai's rulebook bans rehypothecation, even with the client's consent; check the clause in your own agreement.
- It is not a guarantee in insolvency. In Singapore, MAS sets out the consumer protection measures it expects of digital payment token providers in its guidelines PS-G03. The risk warning MAS requires, as printed on Hex Trust's Singapore page, says a trust or segregated account “may not fully protect” a customer's money or tokens if the provider's business fails.
Segregation also does not cover theft, operational error or loss of keys. Those risks are tested in a separate review, set out in the crypto custody due diligence checklist.
Evidence to ask a custodian for
Treat “segregated” as a claim to be proved. Request five items from the company that would sign your agreement:
- The custody terms or trust deed, naming the contracting legal entity.
- A description of the wallet structure: per client, per group of clients or pooled.
- Sample addresses that you can check on-chain.
- The clause on lending, pledging and re-use of assets.
- A legal opinion on insolvency treatment, with the governing law. This is not legal advice; take your own counsel.
Licences also differ by entity and market, so confirm which company holds which licence; the position in each market is explained in crypto custody law in Dubai, Singapore and Hong Kong.
How Hex Trust describes its approach
Hex Trust's live custody page says client assets are “legally and technologically segregated through on-chain account structures” and lists an “Insolvency-Remote Legal Structure”. It does not name the document or the law that creates that structure; our due-diligence guide marks the legal basis as “To confirm”.
Hex Trust MENA FZE is licensed by VARA for Custody Services under VASP Licence VL/23/08/002, issued on 15 November 2023. The licence belongs to that company only and covers the activity named on the VARA register entry. Services such as Wealth Management, token wrapping and lending or staking of digital payment tokens are not offered under, or regulated by, the Dubai or Singapore licences.
Read the entities in about Hex Trust, the evidence on the security page, how proposals are priced on the pricing page and short answers in the FAQ.
FAQ
What is segregation of client assets?
It is the practice of keeping client assets apart from the custodian's own assets, so that they are identifiable as belonging to clients. In digital asset custody it can be done in the custodian's records, in separate wallets for each client, or both. The strength of it depends on the legal documents behind it.
Is segregation the same as bankruptcy-remoteness?
No. Segregation is one building block. Bankruptcy-remoteness is the wider aim that client assets stay outside the custodian's estate if it fails, and it also depends on legal title, a ban on re-use and the governing law. This is not legal advice.
What is the difference between omnibus and segregated wallets?
An omnibus wallet pools the assets of many clients at one address and separates them only in the custodian's books. A segregated wallet holds the assets of one client. Segregated wallets let you check holdings on-chain; omnibus wallets rely on the accuracy of the custodian's records.
Can a custodian lend or pledge segregated assets?
Only if the agreement allows it. The Dubai Custody Services Rulebook, as read for our due-diligence guide, bans rehypothecation even with the client's consent. Other regimes differ, so read the re-use clause in your own agreement and ask for it to be stated plainly.
Does segregation protect me if the custodian fails?
It helps but does not guarantee the outcome. The risk warning MAS requires, printed on Hex Trust's Singapore page, says a trust or segregated account may not fully protect a customer's money or tokens if the provider's business fails. Ask for a legal opinion for the contracting company.
What should I ask a custodian to prove segregation?
Ask for the custody terms or trust deed, a description of the wallet structure, sample addresses you can check on-chain, the clause on re-use, and a legal opinion on insolvency treatment for the contracting entity.
Sources
These sources were read for the Hex Trust due-diligence checklist guide on 12 October 2026. They were not re-opened for this article, so check the current text before relying on it.
- Virtual Assets Regulatory Authority, Custody Services Rulebook, version effective from 19 June 2025, last read 12 October 2026.
- Monetary Authority of Singapore, Guidelines on Consumer Protection Measures by DPT Service Providers [PS-G03], revised on 19 September 2024, last read 12 October 2026.
- Virtual Assets Regulatory Authority, public register: Hex Trust MENA FZE, last read 12 October 2026.
- Monetary Authority of Singapore, Financial Institutions Directory: Hex Technologies Pte. Ltd., last read 12 October 2026.
Statements about Hex Trust come from its live website, read on 6 October 2026.
This guide is for information only and is not investment advice, legal advice or tax advice. It does not recommend any custodian or digital asset. Digital assets are volatile and you may lose the amounts you invest; see the risk disclosure.
Ask for the segregation documents
Request the custody terms, wallet structure description and legal opinion from institutional sales.
Risk warning. Not financial advice. Crypto is highly volatile and may drop in value significantly. You may lose the amounts you invest and your investments do not benefit from any form of financial protection.